Sprint Kills Its LightSquared Relationship, Returns $65 Million

Sprint has given LightSquared back its $65 million and broken off shared LTE plans with the company, which has been unable to receive FCC approval of its proposed 4G network.

Sprint has officially
stepped away from the 15-year deal it signed with LightSquared in the summer of
2011. LightSquared was to be Sprint's partner in rolling out 4G Long-Term Evolution
(LTE) services, but in a March 16 statement,
citing contingencies related to possible interference issues related to
LightSquared's spectrum, Sprint said it is acting on its right to terminate the
agreement.
In addition, Sprint is
returning $65 million in prepayments to LightSquared. The money was meant to
cover costs incurred by Sprint, but whichwith the project hardly off the
groundnever came to be.

Sprint has been and continues
to be supportive of LightSquareds business plans and appreciates the companys
efforts to find a resolution to the interference issues impacting its ability
to offer service on the 1.6GHz spectrum," according to Sprints statement.
We remain open to considering future spectrum hosting agreements with
LightSquared, should they resolve these interference issues, as well as other
interested spectrum holders.

The Wall Street Journal first reported that Sprint would split with
LightSquared on March 15, although many
believe the relationship had soured since the Federal Communications Commission
ruling.
LightSquared, which is backed
by billionaire Philip Falcone's Harbinger Capital Partners, sought to create an
LTE network using spectrum dedicated to wireless satellite communication. The
company made a number of adjustments to the network, but ultimately was unable
to gain approval from the FCC, which found in testing that the network
interfered with GPS signals.
In a Jan. 13 letter to the
FCC, the National Space-based Positioning, Navigation and Timing Executive
Committee said it found that LightSquared's LTE network interfered
with GPS signals to a significant degree, and that the problem could not be
corrected; therefore, no further testing was recommended.
In December, Bloomberg News
leaked the results of government tests, likewise showing it capable of knocking
out a "great majority" of GPS systems. LightSquared CEO Sanjiv Ahuja was
quick to call such reports biased and said they are setting up LightSquared to
fail. Following the Bloomberg report he quickly wrote to the Departments of
Defense and Transportation, calling for investigations into the source of the
leak.
Sprint, through all this,
has been a patientperhaps, hopefulpartner. Sprint, which offers 4G over
Clearwire's WiMax network, is anxious to get on the LTE bandwagon. It entered a
15-year agreement with LightSquared in July 2011 that guaranteed Sprint the
opportunity to purchase up to 50 percent of LightSquared's L-Band LTE capacity.
Anxious for things to proceed, in February, for a second time, Sprint extended
the deadline by which LightSquared needed the FCC's approval and the deal could
move on.
In a particularly notable,
and most recent, setback for LightSquared, Ahuja, who has been a tireless
defender of the network, announced
his resignation Feb. 28.
Sprint said in its March 16
statement that, while regrettable, the termination of the agreement "will
have no impact on Sprint's current customers and is not material to Sprint's
ongoing business operations."
It added that its Network
Vision projectits strategy for rolling out LTE and consolidating and streamlining
spectrum and other assetsis on schedule and on budget.
"We look forward to
begin launching our 4G LTE network mid-year," according to Sprint.

Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.